FMCG, electronic sales down as pent-up demand tapers off

Sales of groceries, essentials, smartphones and electronics in August fell sharply, especially in the second half of the month after pent-up demand fizzled out post the Independence weekend sale season.

Sales of fast moving consumer goods (FMCG) declined 14% in August compared to July, while it fell around 20% for televisions, washing machines and refrigerators, said companies and market research firms. IDC expects July-September smartphone shipments would be around 50 million this year as compared to 54 million last year due to slowing sales and poor supplies of components.

“On a month-on-month basis, the crazy sales growth has come down in August due to pent-up demand tapering off,” said Deepak Bansal, vice president (corporate planning) at LG Electronics, the country’s largest white goods manufacturer. “However, it is too premature to say that consumer sentiments are bad. We are expecting a stable growth rate from now till the festive season."


Companies said lack of online sales events in August and the onset of monsoon in the North triggered the decline for high-value electronic items while heavy FMCG stocking in July by kirana outlets in the run up to the Independence Day sales meant excess inventory post the event.

According to Bizom, which tracks the sales of 7.5 million retail stores across the country, overall FMCG sales in August declined by 14.5% compared to July.

Excessive Kirana Stock
“While sales were up in the first half of the month, there was excessive stock in the kiranas that were being liquidated for the rest of August,” said Akshay D’Souza, chief of growth and insights at Mobisy Technologies, which owns Bizom.

“As a result, after a strong start, FMCG sales tapered off in the second half of the month.”

To be sure, all categories expanded from a year ago as August saw complete unlocking in several states as the second wave dwindled. For instance, FMCG sales grew 44% in August as per Bizom.

“August sales were decent but it cannot match the higher base of July which saw pantry loading and also saw the first round of unlocking,” said Krishnarao Buddha, senior category head at Parle Products, India's largest biscuits maker.

In household appliances, sales contracted 20% in August from July even though Independence Day weekend and Onam sales were robust in Kerala, said Consumer Electronics and Appliances Manufacturers Association (CEAMA) president Kamal Nandi. In July, sales had grown by 30-40% compared with June. “On a year-on-year basis, August sales grew by about 9-10%. Consumers are now waiting for the festive season when they will get bonuses and some offers from brands,” said Nandi, who is also business head at Godrej Appliances.

Supplies for the electronics and smartphone industry have also been hit due to non-availability of containers to import components and the closure or restricted operations at ports in China due to Covid cases. Companies fear this may have an impact during the all-important festive season.

IDC India research director Navkendar Singh said the high pent-up demand seen in 2020 was not visible this year since second-wave lockdowns were not as stringent.

Tarun Pathak, research director at Counterpoint Technology Market Research, said smartphone shipments are down in August due to parts not being available from overseas. “However, consumer sentiments are still bullish,” he said.